No interest under Section 50 of the CGST Act shall be levied on reversal of wrongful availment of credit

Facts: The petitioner has challenged the order levying interest under Section 50 of the Central Goods and Services Tax Act, 2017 relating to both interest on cash remittances as well as remittances by way of adjustment of electronic credit register.

The Petitioner has relied on the provisions of Section 42 of the CGST Act which provides for a notice to be issued by the Assessing Authority in the case of mismatch of particulars at the end of the Petitioner, vis-à-vis particulars furnished in the returns of the selling/purchasing dealer.

Issue: Whether the Petitioner is liable to pay interest on the belated cash remittance.

Held: The Madras High court held as under: 

• the order passed by the Revenue Department to the extent that interest under section 50 of the CGST Act, on remittances by way of adjustment of electronic credit register is not leviable, the court relied on the decision in the case of Maansarovar Motors Private Limited V. The Assistant Commissioner, Poonamallee Division, Chennai, and the impugned order to this extent was set aside.
• The interest on cash remittances is compulsory and mandatory. However, upheld the levy of interest on the belated cash remittance .
• Further held that, in a case where the claim of ITC by an assessee is erroneous, then the question of Section 42 of the CGST Act does not arise at all, since it is not the case of mismatch, one of wrongful claim of ITC.

To read the complete judgment 2021 Taxo.online 762